SODASTREAM INTERNATIONAL LTD AIRPORT CITY, Israel, Aug. 2, 2017 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), the leading manufacturer of home beverage carbonation systems, announced today its results for the quarterly period ended June 30, 2017.
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For the quarter ended June 30, 2017:
-- Revenue increased approximately 10% to $130.6 million compared to $119.2
million in the second quarter of 2016
-- Net income increased approximately 84% to $14.4 million compared to $7.8
million in the second quarter of 2016
-- Diluted earnings per share increased to $0.64 compared to $0.37 in the
second quarter of 2016
"The strong momentum that we've recently experienced building a global sparkling water franchise continued into the second quarter," commented Daniel Birnbaum, Chief Executive Officer of SodaStream. "Machine unit sales grew 35% year-over-year to 859,000 as the compelling benefits of our home carbonation system are resonating with an increasing number of consumers worldwide. At the same time, gas refill units were up 10% to an all-time record of 8.3 million, which is a great indication that our user base is active and growing. Financially, the significant improvement in profitability underscores the benefits of our enhanced manufacturing and expense structure and the power of our business model. We are confident that we are moving ahead with a balanced approach to increasing global household penetration and user retention, both generating greater shareholder value."
Second Quarter 2017 Financial Review
Geographical Revenue Breakdown Three Months Ended
------------------------------ ------------------
June 30, 2016 June 30, 2017 Increase Increase
------------- ------------- -------- --------
In Millions USD %
--------------- ---
Western Europe $74.4 $81.6 $7.2 9.7%
The Americas 26.0 28.1 2.1 8.3%
Asia-Pacific 13.0 13.0 0.0 0.0%
Central & Eastern Europe, Middle East, Africa 5.8 7.9 2.1 36.8%
--- --- --- ----
Total $119.2 $130.6 $11.4 9.6%
Product Segment Revenue Breakdown Three Months Ended
--------------------------------- ------------------
June 30, 2016 June 30, 2017 Increase Increase
(decrease) (decrease)
--------- ---------
In millions USD %
--------------- ---
Sparkling Water Maker Starter Kits $39.0 $46.9 $7.9 20.1%
Consumables 78.1 81.7 3.6 4.7%
Other 2.1 2.0 (0.1) (4.0)%
--- --- ---- -----
Total $119.2 $130.6 $11.4 9.6%
Product Segment Unit Breakdown Three Months Ended
------------------------------ ------------------
June 30, 2016 June 30, 2017 Increase Increase
(decrease) (decrease)
--------- ---------
In thousands %
------------ ---
Sparkling Water Maker Starter Kits 637 859 222 34.9%
CO2 Refills 7,541 8,282 741 9.8%
Flavors 5,970 5,340 (630) (10.6)%
Revenue increased by $11.4 million, or 9.6%, to $130.6 million compared to $119.2 million in the same period in 2016. The increase was driven by growth in most of the Company's geographic regions, mainly Western Europe, partially offset by a negative foreign currency exchange impact mainly due to the weakening of the Euro/U.S. Dollar exchange rate compared to the same period in 2016.
Gross margin increased 240 basis points to 53.1% compared to 50.7% for the same period in 2016. The increase reflects continued production optimization, the leveraging of fixed infrastructure costs on increased production volume and the introduction of the higher margin "Fizzi" machine, partially offset by a higher portion of sparkling water makers in the product mix and changes in foreign currency exchange rates compared to the same period in 2016.
Sales and marketing expenses were $40.9 million, or 31.3% of revenue, compared to $38.0 million, or 31.9% of the revenue, in the same period in 2016. The increase in sales and marketing expenses was mainly due to higher advertising and promotion expenses.
General and administrative expenses increased by $0.6 million to $11.6 million, or 8.9% of revenue, compared to $11.0 million, or 9.2% of revenue in the same period in 2016.
Other expenses were $0.1 million compared to $2.3 million in the same period in 2016.
Operating income increased 83.6% to $16.8 million, or 12.9% of revenue, compared to $9.2 million, or 7.7% of revenue, in the second quarter of 2016.
The net negative impact of foreign currency exchange rate changes, mainly due to the weakening of the Euro/U.S. Dollar rate and the weakening of the U.S. Dollar / Israeli Shekel rate compared to the same period in 2016, was approximately $2.9 million on revenue and $3.2 million on operating income.
Net financial expense was $0.6 million compared to $0.2 million in the same period in 2016.
Tax expense was $1.8 million with an effective tax rate of 11.1%, compared to $1.1 million with an effective tax rate of 12.7% in the same period in 2016.
Balance Sheet Review
At June 30, 2017, the Company had cash and bank deposits totaling $108.5 million compared to $57.3 million at December 31, 2016.
Cash flow from operations less all investing activities was $10.8 million compared to $13.7 million in the same period in 2016. The decrease is due to working capital increase in the quarter, which reflects the increase in demand to the Company's products.
Working capital decreased 1.6% to $122.8 million compared to $124.8 million at December 31, 2016. Inventories increased 11.9% to $98.4 million compared to $88.0 million at December 31, 2016.
Conference Call and Management Commentary
A detailed CFO commentary and a supplemental slide presentation have been furnished as part of today's report of a foreign private issuer on a Form 6-K and will be posted on the Company's website at http://sodastream.investorroom.com.
The Company has scheduled a conference call for 8:30 AM Eastern Standard Time (U.S. time) today (Wednesday, August 2, 2017) to review the Company's financial results. The conference call will be broadcast over the Internet as a "live" listen only Webcast. To listen, please go to: http://sodastream.investorroom.com. Listeners are urged to login approximately 20 minutes before the conference call is scheduled to begin in order to register, as well as download and install any necessary audio software. An archive of the Webcast will be available for 30 days after the call.
About SodaStream International
SodaStream is the #1 sparkling water brand in volume in the world and the leading manufacturer and distributor of Sparkling Water Makers. We enable consumers to easily transform ordinary tap water into sparkling water and flavored sparkling water in seconds. By making ordinary water fun and exciting to drink, SodaStream helps consumers drink more water. Sparkling Water Makers offer a highly differentiated and innovative solution to consumers of bottled and canned carbonated soft drinks. Our products promote health and wellness, are environmentally friendly, cost effective, customizable and fun to use. Our products are available at more than 80,000 individual retail stores across 45 countries. To learn more about how SodaStream makes water exciting and follow SodaStream on Facebook, Twitter, Pinterest, Instagram and YouTube, visit http://www.sodastream.com.
Non-IFRS Financial Measures
This press release contains EBITDA and Adjusted EBITDA, which are non-IFRS measures.
EBITDA is a non-IFRS measure, which represents earnings before financial expense (income), income tax, depreciation and amortization. Adjusted EBITDA is a non-IFRS measure, which is calculated in the same way as EBITDA, and further eliminates the effect of impairment of other intangible assets. We believe that EBITDA and Adjusted EBITDA, as described above, should be considered in evaluating the Company's operations. Both measures facilitate operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structures (affecting financial expenses (income), net), tax positions (such as the impact on periods or companies of changes in effective tax rates) and the age and depreciation charges and amortization of fixed and intangible assets, respectively (affecting relative depreciation and amortization expense, respectively). Adjusted EBITDA is useful to an investor in evaluating our operating performance because it excludes unusual costs associated with non-recurring events and without regard to non-cash items.
Non-IFRS measures should be considered in addition to results prepared in accordance with IFRS and should not be considered a substitute for the IFRS results. A reconciliation of EBITDA and Adjusted EBITDA to Net income, the most closely comparable IFRS measure, is included at the end of this press release. In addition, EBITDA and Adjusted EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include information about possible or assumed future results of our business and financial condition, as well as the results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," or the negative of these terms or other similar expressions: such statements are based on management's current beliefs and expectations and involve a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: our ability to maintain or expand sales in our target markets, including the United States; our ability to maintain or continue to develop our presence in retail networks; our ability to develop and implement production and operating infrastructure to effectively support our growth; the success of our marketing campaigns and media spending in terms of increased sales or increased product and brand name awareness; our ability to maintain our customer base in markets where we have an established presence; the risks associated with our reliance on exclusive arrangements for the distribution of our beverage carbonation systems and consumables in each of the markets in which we use third-party distributors; our ability to compete effectively with other companies which currently offer, or may offer in the future, competing products; our ability to maintain margins due to decline in product selling price and/or rising costs; potential product liability claims if any component of our beverage carbonation systems is misused; our ability to protect our intellectual property rights; our being found to have a dominant position in certain markets which may place limits on our ability to operate; risks associated with our being a multinational corporation, including fluctuations in currency exchange rates; our potential exposure to greater than anticipated tax liabilities; our products being subject to extensive governmental regulation in the markets in which we operate; adverse conditions in the global economy which could negatively impact our customers' demand for our products; and other factors discussed under the heading "Risk Factors" in the Annual Report on the Form 20-F for the year ended December 31, 2016 and other documents filed with or furnished to the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Contact:
Brendon Frey
ICR
Phone: + 1 203-682-8200
brendon.frey@icrinc.com
Consolidated Statements of Operations
In thousands (other than per share amounts)
For the six months ended For the three months ended
------------------------ --------------------------
June 30, June 30,
-------- --------
2016 2017 2016 2017
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Revenue $220,037 $245,929 $119,164 $130,637
Cost of revenue 108,396 115,793 58,695 61,218
------- ------- ------ ------
Gross profit 111,641 130,136 60,469 69,419
Operating expenses
Sales and marketing 70,693 75,677 38,022 40,855
General and administrative 21,550 21,652 10,969 11,617
Other expenses, net 2,327 142 2,327 142
----- --- ----- ---
Total operating expenses 94,570 97,471 51,318 52,614
------ ------ ------ ------
Operating income 17,071 32,665 9,151 16,805
Financial expense (income), net 1,104 (408) 194 645
Income before income taxes 15,967 33,073 8,957 16,160
Income tax expense 2,059 3,969 1,142 1,790
----- ----- ----- -----
Net income for the period 13,908 29,104 7,815 14,370
====== ====== ===== ======
Net income per share
Basic $0.66 $1.34 $0.37 $0.66
===== ===== ===== =====
Diluted $0.66 $1.30 $0.37 $0.64
===== ===== ===== =====
Weighted average number of shares
Basic 21,118 21,673 21,137 21,794
====== ====== ====== ======
Diluted 21,198 22,464 21,275 22,502
====== ====== ====== ======
Consolidated
Balance
Sheets as of
December 31, June 30,
------------ --------
2016 2017
---- ----
(Audited) (Unaudited)
-------- ----------
(In thousands)
-------------
Assets
Cash and cash
equivalents $50,250 $94,531
Bank deposits 7,000 14,000
Inventories 87,986 98,446
Trade
receivables
,net 87,430 92,778
Other
receivables 20,613 21,803
Assets
classified as
held for sale 1,484 -
Derivative
financial
instruments 2,112 1,426
----- -----
Total current
assets 256,875 322,984
Property,
plant and
equipment 164,628 167,525
Intangible
assets 37,582 38,228
Deferred tax
assets 4,154 5,477
Other
receivables 2,688 3,820
----- -----
Total non-
current
assets 209,052 215,050
Total assets 465,927 538,034
======= =======
Liabilities
Derivative
financial
instruments - 363
Trade payables 41,643 53,295
Income tax
payable 8,312 11,486
Provisions 2,646 3,222
Other current
liabilities 22,262 23,297
------ ------
Total current
liabilities 74,863 91,663
Employee
benefits 2,306 2,170
Other non-
current
liabilities 73 75
Deferred tax
liabilities 5,166 5,164
----- -----
Total non-
current
liabilities 7,545 7,409
Total
liabilities 82,408 99,072
Shareholders'
equity
Share capital 3,461 3,544
Share premium 214,609 225,869
Translation
reserve (34,161) (19,165)
Retained
earnings 199,610 228,714
------- -------
Total
shareholders'
equity 383,519 438,962
Total
liabilities
and
shareholders'
equity $465,927 $538,034
======== ========
Consolidated Statements of Cash Flows
For the six months ended For the three months ended
------------------------ --------------------------
June 30, June 30,
-------- --------
2016 2017 2016 2017
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Cash flows from operating activities
Net income for the period $13,908 $29,104 $7,815 $14,370
Adjustments:
Depreciation of property, plant and equipment 6,996 8,327 3,527 4,933
Amortization of intangible assets 1,821 1,536 914 754
Impairment of other intangible assets 1,830 - 1,830 -
Change in fair value of derivative financial instruments 568 (330) 214 1,076
Other expenses, net - 142 142
Exchange rate differences on long-term loans and borrowing 399 - (444) -
Share based payment 2,481 1,594 1,119 1,137
Interest expense (income), net 254 (161) 215 (108)
Income tax expense 2,059 3,969 1,142 1,790
----- ----- ----- -----
30,316 44,181 16,332 24,094
Decrease (increase) in inventories 8,788 (6,997) 10,244 (3,533)
Decrease (increase) trade and other receivables 3,774 (3,765) (6,958) (15,517)
Increase (decrease) in trade payables and other liabilities (1,947) 12,244 3,898 6,907
Increase in employee benefits 176 192 171 111
Increase (decrease) in provisions (254) 576 (61) 559
---- --- --- ---
40,853 46,431 23,626 12,621
Interest paid (293) (67) (235) (39)
Income tax received 45 115 43 15
Income tax paid (4,812) (2,438) (678) (88)
------ ------ ---- ---
Net cash from operating activities 35,793 44,041 22,756 12,509
Cash flows from investing activities
Interest received 39 228 20 147
Investment in bank deposit, net - (7,000) - -
Proceeds from investment grants - 3,903 - 1,177
Proceeds from sale of property, plant and equipment - 1,563 - 1,563
Proceeds from (payment for) derivative financial instruments, net (875) 1,379 (475) 581
Acquisition of property, plant and equipment (15,779) (9,885) (8,211) (4,670)
Acquisition of intangible assets (964) (1,095) (432) (504)
---- ------ ---- ----
Net cash used in investing activities (17,579) (10,907) (9,098) (1,706)
------- ------- ------ ------
Cash flows from financing activities
Proceeds from exercise of employee share options 719 9,749 709 2,223
Repayments of long-term loans and borrowings (10,164) - (7,869) -
Change in short-term debt (2,861) - - -
------ --- --- ---
Net cash from (used in) financing activities (12,306) 9,749 (7,160) 2,223
------- ----- ------ -----
Net increase in cash and cash equivalents 5,908 42,883 6,498 13,026
Cash and cash equivalents at the beginning of the period 34,534 50,250 34,432 80,403
Effect of exchange rates fluctuations on cash and cash equivalents 501 1,398 13 1,102
--- ----- --- -----
Cash and cash equivalents at the end of the period $40,943 $94,531 $40,943 $94,531
======= ======= ======= =======
Information about revenue in reportable segments
Western
Europe The Americas Asia-Pacific Central & Total
Eastern Europe, Middle
East, Africa
------------
(In thousands)
-------------
Six months ended:
June 30, 2016 (Unaudited) $137,001 48,863 21,840 12,333 $220,037
June 30, 2017 (Unaudited) $151,579 53,680 25,191 15,479 $245,929
Three months ended:
June 30, 2016 (Unaudited) $74,365 25,952 13,034 5,813 $119,164
June 30, 2017 (Unaudited) $81,556 28,113 13,018 7,950 $130,637
The following tables present the Company's revenue, by
product type for the periods presented, as well as such revenue
by product type as a percentage of total revenue:
Six months ended Three months ended
June 30, June 30,
-------- --------
2016 2017 2016 2017
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Revenue (in thousands)
---------------------
Sparkling Water Maker starter kits (including $68,627 $87,499 $39,046 $46,908
exchange cylinders)
Consumables 146,076 153,684 78,021 81,715
Other 5,334 4,746 2,097 2,014
----- ----- ----- -----
Total $220,037 $245,929 $119,164 $130,637
======== ======== ======== ========
Six months ended Three months ended
June 30, June 30,
-------- --------
2016 2017 2016 2017
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
As a percentage of revenue
--------------------------
Sparkling Water Maker starter kits (including 31.2% 35.6% 32.8% 35.9%
exchange cylinders)
Consumables 66.4% 62.5% 65.5% 62.6%
Other 2.4% 1.9% 1.7% 1.5%
--- --- --- ---
Total 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Reconciliation of Net income to EBITDA and Adjusted
EBITDA
Six months ended Three months ended
June 30, June 30,
-------- --------
2016 2017 2016 2017
---- ---- ---- ----
(Unaudited)
(In thousands)
-------------
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Net income $13,908 $29,104 $7,815 $14,370
Financial expenses (income), net 1,104 (408) 194 645
Income tax expense 2,059 3,969 1,142 1,790
Depreciation and amortization 8,817 9,863 4,441 5,687
----- ----- ----- -----
EBITDA $25,888 $42,528 $13,592 $22,492
Impairment of other intangible assets 1,830 - 1,830 -
===== === ===== ===
$27,718 $42,528 $15,422 $22,492
Adjusted EBITDA
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SOURCE SodaStream International Ltd.
